Navy secrets bought with prostitutes, bribes

SAN DIEGO (AP) - The gregarious Malaysian businessman nicknamed "Fat Leonard" is well known by U.S. Navy commanders in the Pacific. But prosecutors in court papers say Leonard Francis worked his connections to obtain military secrets by arranging prostitutes, Lady Gaga tickets and other bribes for a U.S. commander, in a scandal reverberating across the Navy.

The accusations unfolding in a federal court case signal serious national security breaches and corruption, with the threat that more people, including those of higher ranks, could be swept up as the investigation continues. A hearing Nov. 8 could set a trial date.

Misiewicz and Francis moved Navy vessels like chess pieces, diverting aircraft carriers, destroyers and other ships to Asian ports with lax oversight where Francis could inflate costs, according to the criminal complaint. The firm overcharged the Navy millions for fuel, food and other services it provided, and invented tariffs by using phony port authorities, the prosecution alleges.

"It's pretty big when you have one person who can dictate where ships are going to go and being influenced by a contractor," said retired Rear Adm. Terry McKnight, who has no direct knowledge of the investigation. "A lot of people are saying, 'How could this happen?'"

So far, authorities have arrested Misiewicz; Francis; his company's general manager of global government contracts, Alex Wisidagama; and a senior Navy investigator, John Beliveau II. Beliveau is accused of keeping Francis updated on the investigation and advising him on how to respond in exchange for luxury trips, prostitution services, and more.

All have pleaded not guilty. The defendants face up to five years in prison if convicted of conspiracy to commit bribery. Defense attorneys declined to comment.

Senior Navy officials said they believe that more people would likely be implicated in the scheme, but it's too early to tell how many or how high this will go in the naval ranks. Other unnamed Navy personnel are mentioned in court documents as getting gifts from Francis.

Francis is legendary in military circles in that part of the world, said McKnight, who does not know him personally. He is known for extravagance. His bungalow in an upscale Singapore neighborhood drew spectators since 2007 to its lavish, outdoor Christmas decorations, which The Straits Times newspaper described as rivaling the island city-state's main shopping street.

"He's a larger-than-life figure," McKnight said. "You talk to any captain on any ship that has sailed in the Pacific and they will know exactly who he is."

Navy spokesman, Rear Adm. John Kirby said Navy Criminal Investigative Service agents initiated their probe in 2010, but declined to comment further, citing the ongoing investigation.

That same year, Misiewicz caught the world's attention when he made an emotional return as a U.S. Naval commander to his native Cambodia, where he had been rescued as a child from the violence of the Khmer Rouge and adopted by an American woman. His homecoming was widely covered by international media.

Meanwhile, Francis was recruiting him for his scheme, according to court documents.

Francis' company bilked the Navy out of $10 million in just one year in Thailand alone, U.S. Attorney Laura Duffy said.